Harbour Energy left Australia empty-handed after a year of chasing gas producer Santos Ltd, missing out on Santos’ stakes in three liquefied natural gas projects in Australia and Papua New Guinea as it sought to become a major LNG player.

The U.S. firm, backed by EIG Global Energy Partners, was forced to bid against itself five times, including twice over one weekend, until it made a final offer of $10.8 billion, up more than 50 percent from its first approach last August.

“The grievance runs deep and it’s heartfelt,” said a person in the Harbour camp.

Harbour Chief Executive Linda Cook, a former senior executive at Royal Dutch Shell, was on a plane last Tuesday when she heard Santos had rejected its sixth offer, worth about A$6.95 a share. She declined to comment for this story.

“There was insufficient engagement with Santos on valuation, no meaningful attempt by Santos to discuss a realistic price which could supported by any reasonable set of technical and commercial assumptions, and an unwillingness by their Board to explore means of closing the gap between the offer and their expectations,” he said in a two-page statement.

Thomas believed by the end of a weekend of back and forth between advisers on both sides that he had a deal with Santos Chairman Keith Spence, a person in the Harbour camp said.

Harbour’s team were parked in Sydney, where Harbour’s backer EIG has an office and advisers at JPMorgan, Morgan Stanley and Highbury are based, according to people involved. “A couple of hundred” people were involved in analysing data and conducting due diligence, they said.

Cook and Thomas met Kevin Gallagher and Keith Spence, their counterparts at Adelaide-based Santos, on May 18. They felt encouraged the board would facilitate an offer going to shareholders, people in the Harbour camp said.

People on both sides said talks were cordial the whole time, but the Santos board was firm on value, and Harbour failed to offer enough of a premium as oil prices marched higher.

Crude prices climbed from around $52 a barrel when Harbour made its first approach in August to $80 last week, their highest since late 2014, as U.S. President Donald Trump imposed sanctions on Venezuela and pulled out of a nuclear arms control deal with Iran, both key oil producers.

What hurt Harbour was the $7.75 billion in debt they had lined up from JPMorgan and Morgan Stanley, which required oil price hedging against 30 percent of Santos’ oil-linked LNG sales, making the deal complex, Santos, investors and bankers said.

“The problem is when you get high-leverage deals there are a lot of terms and conditions you have to meet and it makes it inflexible,” said a veteran Australian investment banker not involved in the bid.

Santos balked when Harbour tried to force the company to lock in the hedges, in order to cut costs for the banks and allow Harbour to raise its offer.

Santos said it was “resilient” to the oil price fall, as it has slashed costs to be cash flow breakeven at $36 a barrel.

The value of the Harbour bid was “simply not compelling enough” compared with Santos’ own growth plan, the risks associated with the hedging and the reliance on Santos’ balance sheet to help fund the deal, a Santos spokeswoman said.

FURIOUS CHINESE

Not only was Harbour jilted at the altar, but the biggest shareholders in Santos, Chinese gas distributor ENN Ecological and private equity firm Hony Capital missed out on more than doubling their combined stake to up to 40 percent in a privatised Santos.

Sources said ENN and Hony were as furious as Harbour.

“They’re deeply disappointed and angry and frustrated,” a person close to ENN said. “They feel that the outcome didn’t reflect some of the conversations with senior Santos people.”

However in a statement to the Shanghai Stock Exchange last week, ENN, which has a director on the board of Santos, said: “The company’s future cooperation with Santos is not affected.”

A Santos spokeswoman said ENN is part of a united Santos board, and the company’s strategic relationship with ENN and Hony remains in place.

Hony said it “will closely follow the further development”.

Swiss energy and commodities trader Mercuria, which was set to contribute 10 percent of the bid, was thwarted in its ambition to use Santos to get into LNG trading, where its rivals Glencore, Gunvor, Trafigura and Vitol are already active.

“A lot of time and money went into this...so it is annoying,” said a person familiar with Mercuria’s thinking.

Mecuria declined to comment.

Harbour’s first approach last August was swiftly rejected by the board under then-chairman Peter Coates, who had also rebuffed a $5.1 billion takeover offer two years earlier when Santos was wallowing in debt as oil prices collapsed.

The August approach was only disclosed by Santos in November after a newspaper outed Harbour. It took Harbour until March to line up funding from JPMorgan and Morgan Stanley and equity from Mercuria, ENN and Hony in order to make another approach.

Top 10 shareholder Argo Investments said the deal was too complex and would have involved Santos taking on too much risk when there was a lot of uncertainty around whether it would be approved.

Shareholders have faith in CEO Gallagher, who slashed costs and cut debt faster than expected over the past two years.

“The proof will be in the pudding as to how Santos looks in a year or two’s time - which is somewhat dependent on the oil price.” (Reporting by Sonali Paul. Additional reporting by Julia Payne and Ron Bousso in London. Editing by Lincoln Feast.)